Debt on four wheels

This weekend, a friend and I were discussing cars and how ridiculously expensive they are – not just to buy, but to maintain and most obviously right now, to fuel. I’m lucky in that I have a car that is paid off, but that I also rarely drive, thus saving me in gas costs. When I’m rehearsing for a concert with the Cathedral Choral Society, I drive once a week, to and from rehearsals (I’m not comfortable taking the bus in that area that late at night, plus it’s SO much faster to drive). Other than that, though, I might take my car out once or twice a month, usually to make a trip to a friend’s house or to the mall or to Trader Joe’s. Everything else is either within walking distance or metro accessible.

That doesn’t mean that keeping my car is cheap. I’m still paying to insure it in the D.C. Metro area, which is not inexpensive. I have a number of friends who have given up their cars, but that’s not a step I’m ready to take, especially since I don’t know where I’ll be living in two years. Besides, for part of the year, I need my car every week. And well, I like it.

My friend was debating whether to buy the car she had been leasing or lease a new car, and I realized just how lucky I was to not have car payments. It’s entirely due to my parents. They bought me a used Jeep when I was in college to get me back and forth for holidays and for my use while at school. When I graduated, they told me it was mine to keep. I lived at home for the year after graduation and worked prior to grad school. My parents refused to let me pay rent, so I helped out where I could, and I earned enough money that I was able to trade in my Jeep and buy a brand new car. I purposely bought a mid-size sedan, knowing full well that I could have this car for the next ten years. Sure, something cute and sporty was appealing to my 23-year-old self, but I knew that there was at least a chance I would someday be dealing with a car seat in that vehicle, and I wanted something spacious. Plus it’s been nice during all my moves.

I don’t plan to ever have a car loan. Ever. I hope to keep my car for a good long time, and when I buy a new car (be it “new” or “new-to-me”), I plan to pay for it entirely in cash. No financing. No monthly car payments.

I was raised to believe that there are only two things you should ever go into debt for – a house and an education. Any other debt just isn’t worth it. (Of course, there is always the debt you can’t prevent – medical bills, etc. Obviously, that’s not the kind of debt I’m talking about.)

My parents have really lived a financially responsible life, and they’ve helped me out in more ways than I can count, both in being able to provide for me, and in showing me the importance of managing my money. Thanks to them, I’ve never had a car payment and thanks to them, I never will.

Megan Smith

Megan is a 40-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:

In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance.  It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information.  It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck.  While that was working for me, clearly I needed a better plan.

While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.

Except that’s not what an emergency fund is for.

So I did a lot of research, read a lot of blogs, and decided that I needed a plan.  I needed to budget.  I needed to know what I was spending my money on.  I needed to prepare for the future.

I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way.  I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.